Goodyear Goes DC Route after DB Pension Freeze

February 28, 2007 (PLANSPONSOR.com) - Tire
manufacturing giant Goodyear Tire & Rubber has joined the
ranks of U.S. employers turning away from their traditional
pension plans in favor of a 401(k) program.

The Akron, Ohio-based company announced in a
press release
Wednesday that it would freeze its salaried pension plan
as of December 31, 2008 and replace it with 401(k) plans
with varying levels of company matching contributions for
current employees starting January 1, 2009.

For example, the company said the match for the
salaried 401(k) plan would be 50% of the first 4% of pay
starting January 1, 2009.

Goodyear also announced a variety of benefit plan
changes effective January 1, 2008, including:

increasing the amounts that current and future
salaried retirees contribute toward their medical
benefits;

“These changes allow us to continue to provide the
kind of compensation packages that are competitive and
will attract and retain talented associates,” said
Kathleen Geier, senior vice president of human resources,
in the news release. “They are also consistent with our
goal of reducing costs in excess of $1 billion by the end
of 2008.”

The company plans to record a first-quarter charge
of $65 million for those actions, which it expects to
reduce the pension obligation by about $100 million and
other post-retirement benefits by $525 million, according
to the announcement.

Details of the plan changes will be directly
communicated to the affected salaried associates and
retirees over the next several weeks, the company said.
Goodyear employees will be able to access online
retirement modeling tools and investment education
sessions to help with pension and benefit decisions and
to plan for the impact of these changes.

About 14,000 active salaried workers will be
affected by the pension and health care changes and
17,000 retirees by the changes to the health programs,
Goodyear said.